By Chris Becker
Another solid night on Wall Street but it was overshadowed by the breaking of the $2000USD per ounce barrier by gold in a late surge that also took silver above the $26USD per ounce level. Bond markets also reacted strongly with new record low in 2 and 10 year Treasury yields as expectations of ZIRP and NIRP see a continuation of money into other safe havens and speculative assets. While economic reports continue to show a revival in US manufacturing activity, there has been no real solution to the ongoing unemployment crisis in the US or any further deals on more stimulus coming from Congress as we head into this week’s NFP print.
Looking at share markets in Asia from yesterday where in mainland China, the Shanghai Composite had a scratch session, closing only 0.1% higher at 3371 points, while in Hong Kong the Hang Seng Index played catch up with a big session, up 2% to 24946 points. This bounces price back above trailing daily ATR support and the downtrend line from the July high, but momentum remains in the negative zone so the next step to watch is a follow through above the high moving average at 25200 points for a new rally:
Japanese stocks also continued their bounceback, with the Nikkei 225 lifting 1.7% to 22573 points, still being pulled along by a higher USDJPY pair. Futures are down a little this morning despite the rises on Wall Street with price looking to firm here once again at a point of control around the 22200 point level but this market still looks a little weak:
The ASX200 is no longer showing any wobbliness (yes, that’s an official technical analysis term) finally re-engaging with the hopium buy addicts and soaring nearly 2% higher to be well above the 6000 point level, to close at 6037 points. SPI futures however are down around 20 points so this may be short lived as price cannot make headway above its own daily high moving average level with momentum barely positive on the daily chart:
European markets are still playing catch up to Wall Street but only just with some hesitation sneaking in across the continent with only mild rises. In fact the German DAX ended up slipping for the session, down 0.3% to 12600 points, as price remains just above ATR support. The previous solid one day bullish reversal has staved off a trend reversal below 12000 points, but the next stage requires a lift above the high moving average at the 12900 point level:
Wall Street continues to run on more upside tech earnings still outweighing all the underlying trends with the NASDAQ at a new record high for the fifth day in a row, while the S&P500 finished 0.4% higher to 3306 points. The daily chart shows price now clearly breaching previous resistance and looking nicely overbought ready for the next stage of irrational exuberance:
Currency markets are struggling to find direction here as traders anticipate Friday’s NFP print with a slightly weaker USD pushing the Euro higher as it tries to recover from its start of week shunt, finishing up this morning just below the 1.08 level. Price is hovering around previous trailing ATR support on the four hourly chart with momentum building to the positive side again but continue to watch the session lows at 1.1730 for signs of another follow through:
The USDJPY pair struggled to get past a resistance zone above the 106 handle with some weakening this morning back down to the 105.70 level. The second stage whipsaw has seen four hourly momentum revert from an overbought mode now into a possible swing short trade with the low moving average breached so a potential breakdown on further USD weakness could follow:
The Australian dollar is making a comeback against USD, heading back above the 71 handle following the RBA meeting, and almost back to last week’s pre-breakout level of resistance. Momentum had been oversold with support obvious just below the 71 level and after failing to make a new weekly low has more potential for upside, but I’m watching the 71.70 level closing on the lower time level charts for possible resistance:
Oil futures rose again with the Brent marker pushing above the $44USD per barrel level in a possible, albeit meagre breakout. The daily chart still shows a sideways bullish trend with price still unable to make a volatile breakout or breakdown as per usual for the black gold, but watch this space as oil always surprises:
Gold is the star of the night, making a record high by bursting through the $2000USD per ounce level in a stonking session. After being down to the $1966 level it soared over $40USD per ounce and is sitting just below the $2020 level on the open in Asian trading today. Where to from here? FOMO points to more upside, but don’t discount some speculative profit taking moves too:
Glossary of Acronyms and Technical Analysis Terms:
ATR: Average True Range – measures the degree of price volatility averaged over a time period
ATR Support/Resistance: a ratcheting mechanism that follows price below/above a trend, that if breached shows above average volatility
CCI: Commodity Channel Index: a momentum reading that calculates current price away from the statistical mean or “typical” price to indicate overbought (far above the mean) or oversold (far below the mean)
Low/High Moving Average: rolling mean of prices in this case, the low and high for the day/hour which creates a band around the actual price movement
FOMC: Federal Open Market Committee, monthly meeting of Federal Reserve regarding monetary policy (setting interest rates)
BOJ/Abenomics: Bank of Japan, economic policy/direction enacted by PM Shinzo Abe
DOE: US Department of Energy
Uncle Point: or stop loss point, a level at which you’ve clearly been wrong on your position, so cry uncle and get out!